Do you have to charge PST or RST on the products and/or services your small business offers? If you're fortunate enough to be doing business in Alberta, Yukon, Nunavut, or the Northwest Territories, you don't need to worry about charging provincial sales taxes, because there are none.
But in the rest of the country, the provincial sales tax situation is more complicated. Ontario, Nova Scotia, New Brunswick, PEI and Newfoundland and Labrador operate under a "harmonized" tax system; when selling retail goods and services in these provinces, instead of charging GST and PST separately, you charge only the HST (Harmonized Sales Tax).
All the other provinces treat the provincial sales tax as separate from the GST (which is a federal tax). To make matters even more confusing, some provinces refer to their provincial sales tax systems as Retail Sales Taxes instead of as PST - and then there's Quebec, which has its own tax entirely (the Quebec Sales Tax or QST).
The provincial sales tax rate differs from province to province, and is normally charged on the selling price of the item before the GST is applied.
Here's the List of PST, GST and HST Rates for All the Different Provinces and Territories
- BC - GST 5% and 7% PST (This came into effect April 1, 2013: see Does Your Business Need to Register for BC PST? for more information.)
- Alberta - GST 5%
- Saskatchewan - GST 5% and PST 5%
- Manitoba - GST 5% and PST 7%
- Ontario - HST - 13%
- Quebec - GST 5% and QST (Quebec Sales Tax) 9.975% (Note that as of January 1, 2013, the QST is no longer charged on GST.)
- New Brunswick - HST 13%
- Nova Scotia - HST 15%
- Newfoundland & Labrador - HST 13%
- Prince Edward Island - HST 14% (note this came into effect April 1, 2013).
- Northwest Territories - GST 5%
- Nunavut - GST 5%
- Yukon - GST 5%
While the PST is referred to as a Retail Sales Tax in many provinces, that doesn't mean that the PST only applies to retail businesses. Provincial sales taxes are charged on retail goods and services, whether you operate a traditional retail business or not.
However, exactly which goods and services are taxable varies from province to province, and there are even variable rates of PST within a particular province, so it's important that you familiarize yourself with the categories of taxable, non-taxable, and tax exempt goods and services that apply to the province you do business in. My Provincial Sales Tax Library has links to provincial tax information for particular provinces
Charging, recording, and remitting provincial sales taxes isn't that difficult a task once you know what the rules are and how to apply them to your business. Hopefully this primer about provincial sales taxes has given you some of the knowledge you need to handle Retail Sales Taxes. If you will also need to charge GST on your sales, visit my GST/HST Library to learn how the GST applies to your business.